Cryptocurrency skepticism: Is blockchain the Netscape of 2017?

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What if one day, people reminisce over bitcoin the way we now think of early internet browsers like Netscape?

Joi Ito, director of MIT’s Media Lab and general session speaker at this year’s PARTNERS conference in Anaheim, California, opened the event discussing his healthy skepticism of the latest tech trend and harkened for a time when technology was given the opportunity to naturally evolve.

“I think there is a lot of potential but, of course, there is short-term hype around it,” he said.

Ito has amassed a team of some of the world’s top researchers, with staff from international banks and a slew of blockchain companies, to head up the Media Lab’s not-for-profit cryptocurrency efforts. And from his vantage point, he believes we are witnessing the next great hyped-too-soon tech product — albeit one that holds just as much promise as the creation of the World Wide Web itself.

The difference between internet browsers of yore and today’s cryptocurrency companies is that they got to formulate their ideas in relative anonymity, whereas today’s blockchain companies have the attention of the entire tech world, Ito says.

“What we are seeing right now is the bitcoin protocol that people would say, some version is going to be a standard at the end. But it’s like 1989, 1990. We don’t yet have a protocol. We have novel networks, but we don’t have a protocol layer. But we are investing like it’s 1999.”

Hype cycles versus evolutionary cycles

You may be familiar with the Gartner hype cycle, a common way to measure if a technology is cresting, troughing or plateauing after a bunch of industry buzz, but Ito likens hype cycles more to a natural phenomenon — a kind of technological equilibrium.

Throughout evolution, the physical systems that survived are what Ito terms “complex, self-adaptive systems.” Every process — be it your body maintaining its core temperature with virtually no fluctuations or the climate of the planet, which is trending toward entropy — has been refined and stabilized by the luxury of billions of years to self-adapt. The result is it has an input, a currency and an output that is beneficial not just to the system itself but to all the interrelated evolutionary systems.

And Ito believes the best technologies function the same way, but often, they don’t have the luxury of the time it takes to naturally evolve. That means instead of adapting to the surrounding ecosystems, tech investors and companies typically operate like their solution is in a vacuum, exploiting all related resources. Ito urged the audience to imagine how their innovations could impact other related systems, and commended Teradata for striving for solutions that span technological ecosystems.

“My concern right now is that we’ve gotten very good at the efficiency and the focus part, but we haven’t been really good at thinking in systems,” he said. “And thinking in systems is important, and thinking across scales is really important. So when i hear some of the stories about Teradata’s work, what’s really exciting is the data coming from the device and the data at the strategy level is connected in a really interesting and complex system.”

When the internet debuted, there were many ecosystem-conscious researchers and consortiums based around Boston, said Ito, but quickly Silicon Valley took a more winner-takes-all approach.

“MIT makes the open standards upon which Silicon Valley makes it monopolies,” he joked.

The early internet was unencumbered by IP concerns and wasn’t focused on profits, which allowed it to proliferate at a natural, self-adapting pace. But that means a lot of the early players were simply creating layers of technologies that would one day conjoin to create the very-profitable internet — like ethernet, HTTP HTML and SSL.

The long path to crypto-maturity

The real dilemma imminently facing bitcoin and other early cryptocurrencies is it’s profoundly difficult to scale a technology that hasn’t had time to be put through the paces.

“We want to make sure each layer is rigorously developed,” he said. “We had decades fiddling around to see if the internet worked properly with no pressure to scale. The bitcoin kids don’t have the luxury.”

But, Ito said, that doesn’t mean the promise of whatever blockchain transforms into 20 years from now won’t be equally astonishing.

“It’s similar in that we can imagine some of the great things that might happen, but you have to get into the mode of thinking that some of the best ideas are yet to be developed.”